Art Is the Darling of Anxious Investors in Venezuela

By JUAN FORERO

Published: July 7, 2004

CARACAS, Venezuela—
The economy shrank sharply for two years, the country's president keeps Venezuelans in a state of constant agitation and businesses struggle to remain open.

But at the sleek new Ascaso Art Gallery, with its four spacious floors, hundreds of art buyers sipped wine and nibbled on hors d'oeuvres as they studied the works of such famed Venezuelan artists as Alirio Palacios and Carmelo Niño.

And they did not just look during a recent art show. They bought, even though some of the sculptures and paintings sold for tens of thousands of dollars -- high prices in an economically unstable country whose president is facing a recall referendum in August that augurs more economic turmoil.

''When you have money, buying art is like putting money in the bank,'' said Vicente Espino, a retired textile factory owner, moments after studying the richly textured paintings of peppers and fruits by José Antonio Dávila. ''Venezuela is a country of miracles, and one is its artists. There's not just one, but many, many good ones.''

Juan Korody, 26, a lawyer, added, as he eyed a $20,000 engraving by Mr. Palacios: ''A lot of people do not buy because they like art. They buy because its a good investment.''

Indeed, in a country hit hard by economically devastating antigovernment strikes, a 2002 failed coup and capital flight that has amounted to billions of dollars, a curious phenomenon is unfolding: The affluent are seeking to shelter their fast-depreciating currency, the bolívar, in art, demonstrating once again that art can flourish in times of crisis, whether in Nazi-occupied Europe 60 years ago, in Communist Cuba in the 1990's or in this politically charged South American country.

No one knows how much art is being bought and sold. But signs of a spirited commercialization in paintings, engravings, sketches and sculptures abound in Caracas, long admired across Latin America for its rich museum collections and trend-setting artists. Art stores thrive in Caracas's malls and affluent districts.

Art festivals attract hordes of buyers. Large museumlike galleries are popping up, like a vast gallery under construction here by Alejandro Freites, Venezuela's best-known art dealer, to house the works of some of the country's marquee names.

''It is amazing, the growth of galleries, the spaces restaurants give to artists, the malls that sell, the art in public spaces,'' said Sofía Imber, the Russia-born founder of the Caracas Museum of Contemporary Art. ''They just put stuff up and it sells.''

And artists like Mr. Palacios, 65, who creates elaborate 8-foot-high engraving of horses and paints with natural pigments made from plants that grow on his hacienda, said he was busier than ever.

Turning to look over at a large, colorful depiction of a horse propped against a table in his studio, Mr. Palacios said, ''This work may cost $20,000, but they will buy it. They may buy it with bolívars, but they'll buy it.''

Wearing a paint-spattered white smock and sipping a strong Venezuelan coffee, Mr. Palacios explained that art sales were as brisk as he could recall. ''It really has been extraordinary,'' said Mr. Palacios, whose 50-year career has included long stays in China, Poland and New York.

The trend has come as President Hugo Chávez, a firebrand populist, embarked on a political revolution aimed at purging the elites from government and remaking Venezuelan society. The art world was not spared the country's political and social convulsions. Mr. Chávez's so-called Bolivarian cultural revolution refocused the cultural emphasis from fine arts toward crafts, leading to an artistic upheaval that cost museum directors their jobs and prompted prominent artists to square off into opposing camps, some supportive of the country's determined opposition, others siding with the president's left-wing government.

Commercial art has not been directly affected by the politics, but Mr. Chávez's economic policies have reverberated in Caracas's art galleries.

Following a failed strike aimed at uprooting him from power, Mr. Chávez last year slashed the value of the bolívar to close a growing fiscal deficit and put in place strict exchange controls to stanch capital flight.

Coupled with high inflation and a budding market in black market dollars, the new economic realities have prompted those with cash to purchase everything from luxury cars to apartments to high-priced art to protect their money from devaluation. With art, say dealers, the collector does not just ensure a valuable possession retains value. The owner can be assured that it will, in fact, appreciate with time.

''The best investment in the world is art,'' said Martha Baluzzo, an economist and art dealer at the Ascaso gallery. ''It may take longer than other things to sell, maybe five years,'' she said, ''but you take this painting, which cost $20,000, and it could sell for $60,000.''

Some of the biggest buyers of art include bankers and the country's booming banks, which have seen profits soar as they turned in recent months to securities investments, practically all bonds and other government-issued paper. They are now purchasing art from artists considered the best, the brightest and the most expensive -- like Jesús Soto and Carlos Cruz-Diez, who also sell well in New York and Paris.